10 November 2020

The shape of the Irish Sea border is becoming clear

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The Government continues to insist that there will be no sea border between Great Britain and Northern Ireland, even as it prepares to build Border Control Posts (BCPs) to check food and animals at Ulster’s ports and designs computer systems to deal with new customs paperwork. Almost daily, detail emerges about how complex it is likely to be to move goods between these two parts of the UK, come January.

This week, an email from an HM Revenue and Customs official, setting out the challenges faced by road haulage companies, was leaked to journalists. A source from the industry told the Belfast News Letter that he and his colleagues “are panicking and we are really angry” about the level of support they are receiving from government agencies, as they prepare for the changes ahead.

In response to the paper’s questions, the Northern Ireland Office and HMRC released a joint statement saying: “We have been consistently clear about our unequivocal commitment to delivering unfettered access for Northern Ireland goods to the UK market.” This is a familiar refrain from government departments, which does not address the fact that the most serious barriers to trade across the Irish Sea will affect products coming into the province from Great Britain.

In August, Michael Gove announced a £355 million ‘Trader Support Service’ to help companies from the mainland navigate the new rules. The BBC reported that the TSS will “effectively see the Government acting as a customs agent on behalf of businesses”. However, the service is not run directly by the Government, it will not deal with food imports, animal products or agricultural goods and it is in a state of unpreparedness, according to my source in the freight industry.

Northern Ireland’s Secretary of State, Brandon Lewis, claimed after its launch that the TSS would “ensure that businesses of all sizes can have import processes dealt with on their behalf, at no cost”. The organisation is not part of a government department, but a private consortium, comprising the consulting firm McKinsey, Fujitsu and a number of Irish hauliers. The HMRC email recognises that the involvement of haulage companies creates “a competition issue” for other freight carriers, which will be required to provide the TSS with sensitive information.

This data will include new EU VAT numbers, or EORIs, with the prefix XI, that companies need to move goods in or out of Northern Ireland. This is only one item in a slate of information that hauliers will need to compile that they do not currently collect and, predictably, the numbers are not even ready yet. Indeed, many of the crucial computer systems that they will rely upon are not available for freight company staff to test either.

When these are eventually online and operational, the hauliers are required to input data that will, in theory, spawn a plethora of paperwork. According to the HMRC, an ‘ENS’ safety and security declaration, required by the EU, will generate a ‘Simplified Frontier Declaration’. In turn, the user will receive a ‘Movement Reference Number’ and a ‘Goods Movement Record’, that must be presented at ports. A final customs declaration is completed after the goods have arrived.

It’s worth remembering that these processes, loaded with jargon and acronyms, are required merely to move goods from one part of the United Kingdom to another. HMRC admits that freight companies will require “an experienced customs intermediary able to support trade and supplement any shortfall in the customs brokerage sector”. It describes this as a “significant opportunity for hauliers…. to provide value-added services either independently or alongside the TSS”.

To translate that into layman’s terms, HMRC is telling hauliers that they can charge their clients in Great Britain more to bring goods into Ulster, because navigating the new border will require expertise that only they are likely to be able to provide (if they can hire the correct people). It’s a very different vision from the Secretary of State’s promise that “import processes” would be dealt with on businesses’ behalf at “no extra cost”.

If the HMRC email is accurate, the TSS is, in any case, only likely to provide assistance to companies for a short time. An official statement to the News Letter claimed that its existence will be “reviewed” after 24 months, but the email states baldly that it will “exit the market after a two year period.” Perhaps this is understandable, as its help seems to be more limited than was originally understood, but the government sold the agency as a guarantee of seamless trade within the UK’s internal market.

Experts think agri-food products will be the most complicated loads to move across the Irish Sea, and, perhaps even more significantly, the TSS will not provide any help for importing food, animals or agricultural goods.

Most of Northern Ireland’s food arrives in shipments from Great Britain, destined for major national supermarket chains. These retailers believe that the health certificates required to move goods into Ulster will cost them thousands of pounds extra for each container. Sainsbury’s chief executive, Simon Roberts, recently told the Guardian that a “substantial number of products and quite key, everyday products” could disappear from shelves in Northern Ireland altogether, without clarity from the Government and the EU on how food products will move across the Irish Sea.

When Boris Johnson introduced the Internal Market Bill, supposedly to mitigate some of the more serious aspects of the Northern Ireland Protocol, he was criticised fiercely for endangering the Belfast Agreement. If that legislation is enacted, despite opposition from the House of Lords, it will remove the requirement for export declarations on goods travelling from the province to Great Britain, but leave in place the most obnoxious features of an internal trade border that effectively divides up the UK’s economy.

It is that extraordinary situation that makes a nonsense of the Belfast Agreement and its promise that Northern Ireland’s integral place in the United Kingdom will not be changed without its people’s consent.

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Owen Polley is a writer, commentator, consultant, and the co-author 'An Agenda for Northern Ireland After Brexit'

Columns are the author's own opinion and do not necessarily reflect the views of CapX.